Page 85 - Book-keeping for Secondary Schools Student’s Book Form One

Ledgers

the need for details on different classes used in preparing financial statements. A
of transactions. The sales and purchases general ledger includes the cash book,
ledgers are explained as follows: which in some cases is also regarded as
a book of prime entry. A general ledger
Sales ledger may also include other ledgers such as
A sales ledger is a subsidiary ledger the private ledger.
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used to record transactions, regarding
credit customers, also known as debtors. Private ledger
Therefore, the sales ledger comprises There are ledgers that directors would not
individual accounts of debtors. The other want their staff to see due to confidentiality.
names for debtors’ accounts are accounts These types of ledgers are called private
receivable or trade receivables. The ledgers. A private ledger is a ledger used
sales ledger can also be referred to as to keep confidential information of the
the accounts receivable ledger, debtors’
ledger or trade receivables ledger. business owner. In this regard, the owner
restricts access to the ledger to selected

Purchases ledger individuals. Examples of private ledgers
A purchases ledger is a subsidiary ledger are capital ledger, and drawings ledger.
used to record transactions with creditors
or suppliers of goods or services on credit. Importance of ledgers
A purchases ledger comprises individual Every enterprise needs to post financial
accounts of creditors. The other name for transactions in ledgers as they play
creditors’ accounts is accounts payable important roles as follows:
or trade payables. The purchases ledger
can also be referred to as the accounts They enable double entry to be completed
payable ledger, creditors’ ledger or trade The double entry principle requires
payables ledger. every transaction to be recorded twice.
That is, every debit entry must have its
General ledger corresponding credit entry. The posting

The general ledger contains different of entries in ledger accounts follows the
accounts that do not record transactions principle of double entry. Posting entries
relating to individuals. Instead, it deals to the ledger facilitates completion of
with total amounts from day books or double entry because a ledger account has
special journals, or postings from the a debit and a credit side, to which debit
general journal to accounts that represent and credit entries are posted respectively.
each class of transactions, namely revenue,
expenses, assets, liabilities and owners’ They are used in the classification of
equity (capital). Posting of entries to the accounts
general ledger follows the double entry Usually, accounts are classified into
principle and form the basis of balances two categories. These are personal and

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